Saudi Arabia's Cabinet has approved opening the country's stock market to foreign investors next year.

The Cabinet decision late Monday paves the way for foreign financial institutions to directly buy and sell stocks listed on Saudi Arabia's $530 billion Tadawul All Share Index starting sometime in the first half of 2015. That's according to a statement carried by the official Saudi Press Agency.

Tadawul reached its highest level in nearly seven years Tuesday when it surged more than 3 percent after the market opened following the news.

A number of powerful companies are listed on Tadawul, including one of the world's largest petrochemical groups, Saudi Basic Industries Corp.

The International Monetary Fund on Monday raised its economic growth forecast for Saudi Arabia from 4.1 to 4.6 percent.